Our View: Brave step confirms commitment to Cyprus’ reputation

Nobody could doubt President Nikos Christodoulides’ commitment to cleaning up the bad name Cyprus has acquired over the years as a country that facilitated money laundering – what is also referred to as illicit finance. This has not been confined to words, but there has been action including the establishment of a unified authority to oversee professional service providers such as law firms and audit offices, despite the strong opposition of their professional bodies.

There was also cooperation, at technocratic level, with US and British authorities for the effective enforcement of sanctions since last year. On Tuesday, underlining this commitment, the Cyprus and United States governments announced a Justice System cooperation to boost Cyprus’ ability to counter illicit finance. A joint statement said that Cyprus police and the FBI, in the coming days, “will sign a memorandum of understanding formalising collaboration between the two justice systems, including with key law enforcement partners, the Law Office of the Republic and the finance intelligence unit Mokas.”

The statement made it clear that the increased cooperation was “in response to a request by President Christodoulides to further empower the Republic of Cyprus to counter illicit finance.” It said that elements of the Department of Justice including the FBI, the Office of the Overseas Prosecutorial Development, Assistance and Training (OPDAT), Task Force KleptoCapture, and the Money Laundering and Asset Recovery Section (MLARS) collaborated with the Department of State’s Bureau of International Narcotics and Law Enforcement Affairs and the US Embassy in Nicosia to respond to Christodoulides’ request.

The US authorities “have established direct cooperation with the Republic of Cyprus law enforcement entities to enhance capacity in identifying and prosecuting financial crimes,” the statement said. Christodoulides had sought US help in sanctions enforcement and monitoring last year after two Cyprus service providers were sanctioned by the US and UK for their links to two Russian oligarchs. This help has developed into a formal collaboration, which will certainly boost the authorities’ ability to combat illicit finance. For too long, the authorities, lacking any real expertise, were ineffective, prompting allegations that the whole system was turning a blind eye to money laundering and sanctions-busting.

Christodoulides recognised that for law enforcement entities to become effective, outside support and expertise were necessary and he was not afraid to ask for it. Of course, he may now be criticised for inviting US authorities to meddle in local affairs but this is the only way for Cyprus to wipe the slate clean and leave behind the reputation for lax AML controls and ineffective enforcement of sanctions. It is a brave step taken by the president, confirming his commitment to cleaning up Cyprus’ act for good. With the US directly involved in the clean-up operation the prospects of succeeding have increased significantly.